Edelweiss Capital has 'buy' call in EIL

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A report from Edelweiss Capital on Engineers India Ltd recommends EIL as a buy. Niraj Mansingka of Edelweiss Capital discusses the reasons for buy vote.

EIL provides engineering and related technical services for petroleum refineries and other industrial projects and slated to invest to the tune of Rs 2 lakh by 2012. Being a government company - government being a key spender in the oil and gas space - it can easily take on competition both existing and new, feels Mansingka.

"EIL is nominated as an engineering company for the oil and gas space and most of the capex lined up are for companies like IOC , ONGC , HPCL , BPCL and other refineries. EIL is the best place to take advantage of that. This is on the growth front," he states.

Edelweiss Capital pegs EIL's order book at Rs 1300 crore by the end of 07, though Mansingka speaks of recent news that could have served to enhance this figure.

He further informs that Edelweiss has an EPS estimate of 34.3 per share for EIL, which makes the PE ratio 15. He further states, "If you look at the PE ranges for most of the engineering companies, they range from 20-30. This gives an upside in terms of approximately 30% on a PE basis."

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